Here's a brief account of how it works in general. Cholesterol is a curing substance inside the body (among many other important functions), and responds to arterial inflammation by getting deposited in combination with other substances, forming "plaque" as a curing agent on the artery lining.
Levels of inflammation in your body can be measured with what's called a CRP test (c-reactive protein). The accuracy of this test still has room for improvement, as it can be alter depending on the time of day and other factors, but it is a better indication of heart disease threat than a cholesterol test (which is practically worthless for determining a heart disease threat).
Another more important test rather than cholesterol levels for heart disease is a test for serum homocysteine levels. The next time your doctor needs you to get blood cholesterol tests, insist on a CRP and homocysteine tests instead. He/she should be well aware of the accuracy of these tests if they are up to date.